Reasons for dependence of rural people on informal sources of credit
Answers
Due to high rate of illiteracy and underdevelopment in rural areas,people have been depending on informal information on credits as their sources because may end making unhealthy moves especially when choosing their projects partners.This is liked most because of the short period of time that is use to acquire and also the minimal security need for the loan.This type of credit is given within a short period of time and are always in small amounts.
Answer:
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Explanation:
1. The rural area people are unable to provide collateral.
2. There is no need of paper work which the rural poor people are not able to provide.
3. In rural areas moneylenders, traders and rich landlords have no objection to defaulters even if the previous loan is unpaid.
4. Poor people hesitant and are not confident about the functioning of the banks.
5. Banks are not accessible to the villages of poor people.
6.The procedure by which moneylenders and rich landlords is very simple.